31 December 2013

Where Have All the Returns Gone?

Not to belabor the point too, too much; but if you still doubt that real returns in anything compute related are a vanishing species, just have a look at this Apple slide. Read the whole page. Poof!

From a later page:
That's right, I still have my old PowerMac G5 Dual 2.5GHz (upgrade from my original 2.0 model). It's interesting to note that single threaded performance has only improved by 2.8x over that 2.5GHz dual G5 machine from around a decade ago.

And now a word from Amdahl:
The first thing I noticed while running this test is how much the workload can impact CPU core utilization. Even though I was dealing with a substantial 4K project, only portions could spawn enough work to keep all 12 cores/24 threads busy.

All that investment of billions and billions of dollars just to ... what? As the Red Queen said, "Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!" (Pulled from the wiki)

An Epidemic of Kissing Disease

How old would you think the word 'monoculture' is? My guess, before I went out to discover, was at least since Stephen J. Gould. Turns out, that's wrong, that is, off by a bunch.

According to here, it appeared in the OED for the first time in 1901. Which likely means it was in use during the 19th century.

Those in the *nix community have been vocal in their warning that M$ DOS/Windows dominance leads to the usual casualties of inbred stock. What they've been less vocal about is the monoculture at the hardware level. While one can build linux from source, and if you can verify that all the source is clean, then you're somewhat outside the box. But that chip is still X86.

So, have a read of the latest paranoid's jeremiad. One might wonder how the 'strict constructionists' abide such? Just because the Floundering Fathers didn't have PCs and innterTubes, does it follow that only the means of communication and domicile that existed in 1789 are protected from Government (and their corporate minions)? One might conclude that, in the case of personal freedom, the Right would eagerly adopt a 'living document' viewpoint. Or could it be that they believe in the sanctity of government, after all? Obama has, just on the basis of admitted behavior, done what the Right Wing wants. The crunch will come when any level of protest gets one labeled 'terrorist'. We've been there before, and it wasn't pleasant.

Who is being protected from whom?

Where's a Robo Cop when you need one?

28 December 2013

Dig a Hole to China

As mentioned in these endeavors over the last couple years, on occasion, it is obvious that the Chinese experiment in social Darwinism must needs assault its economy in much the same way it did the West's. That Giant Pool of Money is still out there, getting bigger, and still demanding high return on minimal risk. That there ain't no such thing as a free lunch matters not to those who wish to live well on moolah alone. Daddy Warbucks, at least, actually made some stuff. Today's banksters merely suck moolah from the fire house aimed by the savers at the borrowers. Never forget that it was a Chinese, Li, who foisted the Gaussian Copula on us. Financial quants are driven by visions of finding the Ultimate Loophole in the system, that crack in the dam holding back all that moolah from their hungry maws, and Li provided, what looked like, that loophole. No, it is way too Byzantine to conclude that Beijing sent him in, "Bond, James Bond" style, to wreak havoc on the hated West. Or is it....?

With the West's fitful (can you say: "neutering Volker"?) attempts to bring the banksters to heel, all that Chinese money is now being directed inwardly. With the expected result. I've mentioned the "60 Minutes" report (revealing the ongoing real estate fiasco) from a few months ago, and much earlier stories from print sources.

Today brings us another. Don't be surprised.

I long ago forgot where I read/heard it (you can find it in older essays), but the following semi-quote about sums up the cynic's view:
"One hears from CEO types about how much work it is to run these corporations, but they never seem to want to take on failing companies. The ones they do run could be just as successfully run by a sock puppet."

Which brings us to:
Yao Jingyuan, the former chief economist at the state statistics agency, said ... "With this kind of operational model banks will continue making money even if all the bank presidents go home to sleep and you replaced them by putting a small dog in their seats."

The piece ledes with the punchline, as any cub reporter has been taught to do:
China's financial system is in danger of becoming too big to bail out.

My, my. All that money, and little to do with it, besides build yet more condos.
Official bank lending has more than doubled since the global financial crisis, growing nearly twice as fast as the overall economy.

Without all those Western mortgages to soak up the moolah, China is generating such internally. Good luck with that.
"The chains of lending and borrowing can be long, just like the securitized subprime mortgages. The result can be devastating."...said Yu Yongding, a senior fellow at the Institute of World Economics and Politics of the Chinese Academy of Social Sciences...

Stating the obvious:
Savers have had few alternatives to banks until very recently: Real estate prices are already stratospheric relative to incomes...

Ya think??? Time to copulate.

25 December 2013

Pilgrim's Progress

In one of my previous cubehomes, I had a Post-it note with the kilocalorie measure of known chemical sources. At the top of the list was gasoline; IIRC, ethanol was next at about half as much. Over the years, I've prattled on about this fact. The whole notion of progress boils down to increases in energy consumption per capita (mean or median, take your pick). Given both gasoline's energy density and portability, there is no transformational alternative energy source, short of Mr. Fusion, which doesn't demand a transformation of society's structure. You can look it up: GM bought up electric railway systems (with a vengeance post WWII) in cities and towns, and put in buses. The rationale (not that GM had any specific interest at stake, of course) was that buses could be sent on diverse routes as populations shifted, and needs changed. Ignored by such argument was the fact that populations huddled around tram lines, not the other way round. Suburbia has done quite the same with ring and radial limited access motorways in cities. I lived in, and watched, the transformation of Washington, DC with respect to both rail and highway creation. If you build it, they will come.

Put more bluntly: all of the other alternatives require socialized usage of said energy source. It's the divisibility and portability of gasoline that makes it transformational relative to the socialist structures of centralized energy sources. Chemical batteries haven't (and can't, by my ancient understanding of physics, chemistry, and thermodynamics) reached such a density. As populations move (or forcefully relocated) to cities, the lure of gasoline diminishes. As the farmersonly.com ad says, "city folks just don't get it". May be true, but sodbusters in their shitkickers are a rapidly shrinking minority; intent on running the country their way, of course. Because city folks just don't get it. We out here in God's country need our Bible, Guns, and Meth.

And, lo and behold, for the last couple of weeks, the socially responsible folks at Exxon/Mobil have been running a PSA (no, I don't find a YouTube version listed, so you'll just have to watch football, and such, to see it) extolling this density advantage: a gallon of gasoline will run your smartphone for 3,000 days. Gasoline uber alles!!

But, what got me to type all this out was the result of looking into the collapse of the USSR. And this toddle through the innterTubes led me to this article, which I've not gotten all the way through, so there's some chance that the following quote will end up being contradicted later. Even so, I'll take the chance:
Yes, labor, capital and technological innovation are important inputs into economic growth, but what Cleveland et. al. (1984), Cleveland et. al. (2000), Smil (1991, 1994, 2005) and Reynolds (2002) make so clear is that energy is a vital ingredient to growth and technology. If you take away energy, the labor, the capital and the technology inputs cannot do a thing. As one physicist friend said to me once, "I bet (those economists) can't even change a tire."

I do believe that's the first time I've seen some pundit make the connection.

16 December 2013

Dollars and Cents

How do you stop people/companies from doing something bad/ignorant/stupid which fucks up life for the rest of us (and, sometimes, the perps themselves)? Two examples from recent news provide some insight.

The Volker Rule, watered down as it is.

Shawn Thornton's 15 game suspension.

In both cases, crimes (or misbehaviour, if you prefer) are punished after the fact. The better way is to modify the incentives to behave badly. In the case of Volker, and financial sector regulation generally, is to end the veil of protection afforded corporations. The Supremes have already decided, by what logic I don't follow, that corporations are somewhat persons. Well, just as parents of juveniles are responsible for the bad behavior of their minor spawn, so corporate officers are responsible for the corporation's bad doings. To the slammer, do not pass GO, do not collect $200.

In the case of NHL hockey, set the rule: a minor penalty is now four minutes, and the offended player chooses which player on the offending team warms his ass in the sin bin. Change the incentives.

The movie "The Wolf of Wall Street", from the book of the same name, and a semi-accurate, semi-autobiographical tale of astounding evil is in the adverts now. Intended, so it appears, to make the working stiff retch at what the cunning and devious can garner. Albeit, this guy did get caught. Coming to a theater near you soon. Of course, the powers that be don't really want to adjust the incentives, since they'll be trotting through that revolving door soon enough. Don't want to endanger The Big Pay Day.

12 December 2013

What Hath Quant Wrought?

Today's Business section of the NYT has a host of malfeasance on display. A cornucopia of greed and punishment. But that's not what I came here to talk about. Jesse Eisinger has a DealB%k piece, and he's got some reporting of research which illuminates.

What was the proximate cause of The Great Recession? The answer largely depends on which end of the political/economic spectrum one sits.

The Right tale goes: "It was all those poor folks tired of living in shotgun shacks (and wanting McMansions) who came to the overly solicitous and naive` mortgage companies and banks demanding oddly structured subprime ARMs, the parameters of which they dictated to the naive` mortgage companies and banks. Who, being naive`, reluctantly devised such loans. Of course, the loans eventually went South, victimizing the mortgage companies and banks."

The Left tale goes: "The Banksters (mortgage companies, banks, rating agencies, and the Trilateral Commission) set out to gut the 99% and get rich in the process by creating mortgages which enticed the naive` poor folks into believing they could leave their shotgun shacks for McMansions. When said mortgages eventually collapsed, the Banksters kept their ill-gotten gains, and the poor folks retreated to their shotgun shacks, now paying more in rent than they did before the whole sorry tale happened." (Aside: private-equity, hedge funds, and God knows who else are slurping up housing and becoming absentee corporate landlords. That will not end well for communities.)

The truth, to the extent that anyone can be objective, lies mostly with the finance industry/sector growing into Jabba The Hut. One of the earliest themes of these endeavors is that Greenspan is Patient Zero in the epidemic. By crashing interest rates, he set in motion the effort to generate other vehicles of "risk free, high return". There are no such vehicles, of course, but since finance was about as unregulated by 2001 as it's ever been, there was no adult driving the train. "Let's see how fast we can make the choo-choo go, Mary!!" And it went fast.

While I can't claim to be the first to suggest it (although my recollection is that finding others, in the pundit class, who expressed the notion followed my coming to the conclusion), the problem with the financial engineering brigade, i.e. raptor-quants, is that they don't want finance to be simple and boring. Convoluted and opaque is better. And the reason it's better is that profit from finance comes not from value added, but sucked out of the moolah stream twixt savers and borrowers. Better to hide the shenanigans.

Which brings us to Mr. Eisinger today. He reviews some of Jack Lew's, the newish Treasury secretary, earlier pronouncements, along with data produced by outside researchers. It is these concrete facts which are of interest.
The way to really solve "too big to fail" is not by tinkering with the existing system, which leaves the great and fundamental problem still with us. The economy has become overly "financialized."

GE's profit percentage from finance had reached 50%. Other companies saw a quick buck, and took to shuffling paper and sucking moolah from the, what looked like, tidal wave of moolah to be processed.
Historically, finance's share of the economy has been at about 4 percent. Today, it's about twice that. And the peak occurred not in pre-bubble 2007, but in post-crash 2010, at just under 9 percent, according to research from Thomas Philippon of New York University. That represents a shift of more than $600 billion of wealth a year, as Wallace C. Turbeville, a former investment banker-turned-financial reformist, has pointed out.

The result is obvious:
Despite technological innovation, finance costs more than it used to, even though prices have fallen for things like trading stocks.

The Banksters suck their profits from the stream. Even Eisinger has the gonads to be plain:
The financial sector has become a self-sustaining perpetual motion machine that extracts money from the rest of the economy. Shouldn't it be a goal of society -- Mr. Lew's focus -- to restore the financial industry to its traditional role as an intermediary between companies that need capital and savers who have it?

In simple words: finance should be simple, dumb, and transparent. And cheap. It is after all, little more than Marrying Sam, putting savers and borrowers together. All the fancy quant does is extract ever more from the stream for the quants and their bosses. The quants would be more productive in marine biology and such.
Research from Professor Philippon shows that financial activities have gone up in the deregulatory era, and now cost about the same as in 1900, the last Gilded Age. In other industries, like retail, technological innovation has led to lower prices and therefore decreased the size of the sector. In finance, the opposite happened.

The tail is wagging the dog.

(Go to the web page to follow the links to the underlying research.)

10 December 2013

Maker's Mark

They ads say, it's a really good hootch. Could be, but I don't often get shit faced, so I wouldn't know. But in the course of commenting on SA, I wordsmithed (not the first time), so I'll take this opportunity to mark my words.
Thus we have the fabless companies, seeking to avoid [having to make and sell physical chips]. But, of course, someone has to have the fabs. Well, until we're all implanted with The Personality and Economic Function Chip as we slip down the chute. And that fab with be owned by Big Brother (who may be government or RoboCop Corporation; as things stand now, RoboCop is more likely).

The Personality and Economic Function Chip™

Hey, if the tobacco companies can claim dope names, I can claim science fiction names. (And, no, I've never bothered to confirm that urban legend. Were it not true, such would spoil all the fun.)

08 December 2013

Isaac Singer's Revenge

Thomas Friedman's column today impels me to work out some ideas that have been bubbling away for some time.

Let's start with a sig from the archives,
Like everything else in technology, the cost of starting a startup has decreased dramatically. Now it's so low that it has disappeared into the noise. The main cost of starting a Web-based startup is food and rent. Which means it doesn't cost much more to start a company than to be a total slacker.
-- Paul Graham/2005

Nearly a decade ago, Graham defined in the new era of the sewing machine. While the sewing machine enabled industrialists to build factories, it also forced (pre safety net; and post, of course) women into slave wage piece work at home. These days, the cheap PC with 16gig, i7,and SSD is much like the sewing machine of 1850: anyone can build a web site. Or, with an R/RStudio installation, claim to be a high-powered quant. And, since anyone can, it's an exercise of low value, and most of the profit redounds to those few who can ensnare the many who do the work. Say hello to Oliver Twist; "More? Not on my watch, buddy. Keep typing, that ACA mod is due today and important people need their healthcare". Have to find some way to scrounge up $3,000/month for a cheap flat in that City By The Bay. I mean, California could demand all those starry eyed, but welfare dependent, tweens to spend 20 hours a week maintaining the DMV in exchange for the coin to pay for the latte`. Imprisoned drug dealers make the license plates, hungry tween coders run the agency. Birds of a feather, and all that. I wonder whether the Indians could still compete with jail labor? Just a thought.

Here's the difference between today's software "entrepreneur" and Hewlett and Packard in the 1950s (read up the Wiki piece):
Of the many projects they worked on, their very first financially successful product was a precision audio oscillator, the Model HP200A. Their innovation was the use of a small incandescent light bulb (known as a "pilot light") as a temperature dependent resistor in a critical portion of the circuit, the negative feedback loop which stabilized the amplitude of the output sinusoidal waveform. This allowed them to sell the Model 200A for $54.40 when competitors were selling less stable oscillators for over $200. The Model 200 series of generators continued until at least 1972 as the 200AB, still tube-based but improved in design through the years.

Real engineering, making a real product that had constructive usefulness. Today's tweens make twitter and instagram and sundry diverting entertainments. Could there be a greater gulf? I think not. But twitter and instagram are the sort of toys that one can make with little capital and little intelligence. Kind of like sewing blouses. Hewlett and Packard were Stanford EEs, for crying out loud. Today's generic tween is a PHP hacker who never took a math or database course, assuming said tween even spent time in higher education. Most of the tweens disparage education, if you scratch their very thin surfaces. One in 10,000,000 get to be Zuck (who may have cadged the whole thing from Those Other Guys).

Which brings us to the misguided, as he usually is, Friedman.
We're now in an era in which globalization and the information technology revolution have merged to drastically shrink what was the basis of our middle class for so many years: the "high-wage, middle-skilled" job.

Yes, but, this happened as a result of policy decisions, not the least of which was the "opening" of Chinese labor to American corporations. Economists of the micro- persuasion (and quants, who mostly work to maximize revenue for their corporation), mostly (always?) argue that the field is ignorant, and rightly so, of value judgment. Whatever the math says is the right answer, even if the answer is that oligarchs get 99.44% of wealth and the rest of the society starves in their service. Adam Smith (the real one) didn't agree, by the way. The difference between 1776 (when Smith's most famous book was written) and today is that the oligarchs have the NSA, et al, protecting them from the guillotine.

What Friedman, either out of ignorance or deceptive intent, doesn't talk about is that all of the human condition is relative. The USofA, post World War II, had a blue collar middle class because policy made it possible. After all, the war ended the Depression (thus proving the point that massive government spending will lift an economy out of collapse, a fact which disturbs the Right Wingnuts), and was still within the life experience of most of the country's citizens. The laissez faire policies which led to The Great Depression could have been allowed to return. They weren't, and until 1973 when the Arabs had enough of Israel and its enabler (us), life went well.

Time for another quote.
As mass production has to be accompanied by mass consumption; mass consumption, in turn, implies a distribution of wealth -- not of existing wealth, but of wealth as it is currently produced -- to provide men with buying power equal to the amount of goods and services offered by the nation's economic machinery.
-- Marriner Eccles

That quote has permanent place at the start of one version of this endeavor, and it is key to both quant and policy. It is key to quant because it refutes the nihilism of the quant ethos. It is key to policy because it provides the logical foundation for equitable decision making; you don't miss your water until the well runs dry, and you don't feel hungry until you've killed the golden goose. In both cases, the goal is growth of the society and economy without having to resort to the guillotine.

So, Friedman continues,
In today's hyperconnected world without walls -- when more Indians, Chinese, computers, robots and software can perform more average blue-collar and white-collar jobs -- the only high-wage jobs are increasingly high-skill jobs.

Wherein he blithely ignores a key factor in the collapse of the American white collar middle class: the invasion of cheap Indian (and others, to be fair) white collar labor. Tom, old sot, you can't have it both ways. Especially in just one sentence. I guess The Times doesn't edit your copy? Moreover, the number of high-wage/high-skill jobs is necessarily limited, since they're the explicit result of pyramiding the workforce. To put it plainly: more high-skill workers will only drive down the value of high-skill work while relentless automation diminishes the number required. Remember what the Indians are doing to us? D'oh!!!!!

In any case, there was only one Einstein. Establishing an educational system which winnows out the participants, until there's just an Einstein, leaving the rest to starve can't win in the long run. That's North Korea, in case anyone's still not getting the point. And more than a few white-flight suburban gated housing tracts; "so glad to get away from all those SNAWT".

He then goes on to quote one Andreas Schleicher, who runs the PISA (Program for International Student Assessment)
"Since the link between skills, jobs and growth is becoming ever tighter, it will be harder and harder for governments to address inequalities through redistribution"

Which is exactly wrong. Education, as well as innate intelligence and height and weight and beauty, is all relative. Telling kids that getting some level of education is the key to comfortable adulthood is just a lie when there isn't demonstrated demand for such skills (all that Arab Spring). The 20-somethings hoping to score the next instagram know that already, hanging out in those Bay Area coffee shops, furiously sewing away on their laptops. "Just one more blouse..." The cure for maldistribution is... wait for it... a theory of distribution which is inclusive rather than the Right Wing's exclusive. Robinson Cano` just got $240 million (over ten years) from the Mariners. Is that sufficient justification for middle schools to institute bayesball as top of the required curriculum? Not even the nuttiest of the Right Wingnuts would go that far (Codd, I hope so).

The real world of production has less and less demand for increasing high skill as automation continues on its exponential expansion. There was a time when one had to be a grizzled EE in order to design a cpu. Today? You just need to know a bit about EDA Lego machines. In a nutshell, it really has devolved to Lucy on the assembly line (if that doesn't sound familiar, do the search), with the exception of the folks who make the tools. The number who make the tools (and need the high-skills) is vastly smaller than those who use the tools (and don't need the high-skills, or get the big wages); as it always is in a Social Darwinist world. As Graham observed, not much of anything is needed to make a toy program.

There is a canary, at least one. It is called Apple, which has long since abandoned making computers as its modus vivendi. Some are convinced that it can't continue to grow revenue and profit by catering only to the 10% (or thereabouts) of the US/EU. Others believe it will score a deal with China Mobile. Even if the deal happens, on even generous (to Apple) terms, China's long adopted strategy of currency manipulation (I know, some Really Important Pundits insist that doesn't happen) may make for a Phyrric victory. It's by no means sure that there are enough Chinese who can afford a $700 phone to make much difference even if the deal happens. It's easy to grow 10%/annum when you're small; not so easy when you've eaten nearly the entire planet.

Finally, we get to the Supremes. You can (if you've not yet) read up Vaughan-Nichols' piece here. He's in the 'patents on software is stupid' crowd, as am I. The notion of software, and worse, business method, patents is destructive. If the Floundering Fathers wanted abstract ideas patentable, they would have said so. Algorithms were a known entity at the time, so don't prattle on about modern times.

In sum: patents grant to the smart (or, as often, lucky) an effective perpetual monopoly on some construct. The length of this perpetuity has been lengthened by Congress many times since the Founding (not that Congress bowed to pressure or anything, of course). Congress has done even worse with copyright, of course. Walt's heirs will own Mickey until we blow up the planet. Carving out high living by law (which is to say, policy) to the few won't help get us out of collapse; it will just accelerate the call for the guillotine. The data show us how Western economies were constructed when they did well, at the macro and household levels. The intelligent approach is to build such a construction.

06 December 2013

It's in the Bag

Thanks, once again, to Artima for a precious linked piece. I haven't followed javaworld, on purpose anyway, in some years.

Why this piece? Well, as sometimes mentioned on various versions of this endeavor, I'm a Bermuda-phile. I've only been there once, alas, but I've stayed attached through various on-line versions of its newspapers. For most of the time since universal sufferage (not so long ago as one might assume), the government was of the (generally accepted) black/native party, the PLP. Until the last election, when the (generally accepted) white/foreigners party, the OBA, won election. Since that time, the drumbeat for punishing the lower classes, in particular blaming the lower classes for the oppressive (generally accepted) price level, has gotten very much louder. Never mind that prices on a group of tiny islands (as a child, I was taught that the place was named The Bermuda Islands, not the more common singular of today; it is in fact an archipelago remains from the cone of a volcano) are driven by transport costs and the brutal income skew of those uppity white folks.

Couple that with recent reporting on crime and cost of living problems in the Dakotas' oil patch, and an age old theme emerges.

Which brings us to the techies, which term among the Kiddie Koders is presented as insult.
As the San Francisco Chronicle's Nellie Bowles reports, the word "techie" has become an insult, comparable to being called a yuppie in the late 1980s, only with less developed personal grooming habits.

That quote includes a link to the Chronicle story. But no matter. The javaworld piece is suitably tongue-in-cheek and a bit satiric. And then there's this:
Take San Francisco's Mission District, where cheap burrito joints, secondhand clothing and appliance stores, and mom-and-pop tiendas still abound. The average rental for a one-bedroom apartment there is now nearly $2,700. In South of Market, the former warehouse district where many of these bubble companies are based (full disclosure: as is InfoWorld), rents are approaching $3,500 a month.

One can never be too rich or too thin.

And I'll close this missive with:
They're actually Digital Bohemians and Aspiring Glassholes -- or D-BAGs for short.

I assume that those who created the acronym (or backronym) are aware what a real D-BAG is?

04 December 2013

Unhand Her, You Cad; The Map

Well, there's been a tonne of ink spilled about Bezos' spiders' web. Everyone concludes that it's just nuts.

Have a look at this map. Long range octocopters, perhaps? For the 10 mile radius that Bezos mentioned, and given that most of the centers are more or less in the middle of nowhere (downtown Boston is sort of expensive real estate), delivery coverage isn't much. I saw a comment in my journey which postulated that Amazon would send out semi-trailers loaded up with flying spiders, find a central point, jack-in-the-box the top of the trailer, and spew thousands of spiders. Snakes on a plane seems tranquil by comparison.

02 December 2013

Unhand Her, You Cad

There's that line, sort of, from 1930's cliffhanger serials; "Unhand her, you cad!!" I was watching something else, and I'm not a fan of Bezos anyway, so I missed the piece about the drones. Helpfully, it's now made print (well, sort of). As predicted in these endeavors some time back (I'll leave the spelunking to the reader), Amazon is transforming itself into a Brick & Mortar outfit, just with some Emperor's New Clothes.

In order for 86% (<= 5 lbs.) of deliveries to be made with flying spiders, there have to be warehouses, aka stores, within a fairly small distance of 100% of Amazon's customers. Given technology (battery capacity or internal combustion engine miniaturization) a SWAG on delivery radius is on the order of 30 minutes (60 minutes round trip) flight time. So, 100 mile radius requires ~ 200 mph. A sky full of these flying spiders at faster than (all but raptor style firing platforms) helicopter speed? Not likely. So, lots more warehouse, aka stores, will be needed.

Densely populated areas provide the best bang for the buck, but how does delivery work for apartment buildings? Will a storage box, with one way top hatch have to be built? Who pays for that? How will it be engineered to allow packages, but not rain/snow/sleet/rodents? "Bob, we've got RATS!!!!"

Publicity stunt. Amazon still makes no money, and continues to morph into Wal-Mart, without the parking lot, but lots of humans scurrying around getting widgets. Silly.

29 November 2013

Angry Birds

When these endeavors began, the first post asserted "Why the Stimulus Will Fail"
In 2009, who are the unemployed? Not, by and large, workers in factories that will make goods for American consumers. The deindustrialization of the economy, in progress since the 1970's, makes any stimulus program a low probability gamble. Will the stimulus program re-employ the leeches in the financial services industry that sent us over the edge in the first place? It is important to realize that this sector of the economy had grown to a very large proportion; possibly unprecedented. Even if the Federal government chose to reward them with new employment, what is it that the Federal government could buy from the sector? Variable annuities? Would those who are re-employed as a result of the stimulus program spend their newly increased incomes in the financial services sector, thus re-employing all those folks? Would that be rational?

In later postings, which don't come to mind (and given the allusive nature of post titling used ...), this notion was made more specific. Any economic recovery from depression/recession faces a fork in the road early on: either re-inflate the businesses which had been employing those made redundant by the collapse (even, and especially in the current case, those who caused the collapse), or move the economy into new (and by intent anyway, less silly) modes of production. I've returned to them in both versions of this endeavor on occasion. Re-inflation is easier to do, since it rewards the wealthy miscreants, and that's exactly what the QE exercise has done. Total employed has barely changed over the course. Capital gains, for those with capital naturally, have exploded. Such a country!!

In sum: the raptor-quants intend to snip the gonads off the only part of Dodd-Frank that deals with the root cause of The Great Recession. They want all mortgages to be classified as exempt from the stricter rules (which aren't all that strict, particularly in historical context). They want to go back to 2004 when they could slurp jeroboams of moolah from the stream going from the saving class to the borrowing class. A zero-sum profit machine.

As Floyd Norris reports today, the Banksters, in harmony with builders and even some titular Left Wingnuts, have been hard at work to "Make it So", putting the oomph back into Banksterism.
The rules on qualified mortgages are meant to assure that consumers can afford them, and the requirements are rather low. Lenders must go to the trouble of verifying a borrower's income, and the total monthly debt obligation must be no more than 43 percent of pretax income. There are no requirements for down payments, or limits on how much is lent relative to the value of the property.

He later quotes the figure I've generally used: 35% as the operational rule of thumb. The new rules define three classes of mortgages, with the best having no restrictions. Naturally, the Banksters want all mortgages to magically qualify. "Welcome to Lake Homebegon, where all the Banksters are strong, all the men are feckless, and all the mortgages are above average."

So, the part of Dodd-Frank that's under assault is that which intends to rein in profligacy by home mortgage issuers (be they banks or mortgage companies). Both don't want to go back to the Good Old Days (which they always do, mostly) when savings' banks lent most mortgages and held them to term. Not much moolah to be slurped up that way. Better to make loosey-goosey ARMs and such, and sell them off for a quick few bucks. The builders don't want the new rules, since such rules reduce the number of high value qualifying houses; higher price thus higher profit. Just ask Apple how that works.

The raptor-quants are starting to feel hungry and need a hearty meal. I suppose it's just a coincidence that we hear about their hunger pangs at Thanksgivanukkah.

27 November 2013

Snake Bit

Bitcoin is in the news again. Twice in the NYT in a few days (once, and twice).

What none of the pundit class has discussed, in the cyberink that comes my way, is what a fixed amount of currency (21 millions "units", as I understand it) would have on a global economy? If the "exchange rate" (e.g. $35/ounce as gold once was) is fixed, then dee-flation is the rule. It has to happen, since as commerce expands both across nations (growth by accretion) and within nations (growth by procreation) prices have to aggregate to the amount of currency available.

If one looks at 19th century USofA, when specie money was the law, that's exactly what happened. There was localized inflation in mining areas (shopkeepers charged steep prices for necessities, and more for amenities), but national deflation since the economy was expanding along with its territory. With a nearly fixed amount of specie, relative to economic activity, aggregate prices had to multiply out to that specie hoard. Holders of specie made out, but the rest of the economy suffered in debt that grew in real terms. Not a process that aided Main Street. Not to mention tech/science was creating truly new forms of goods and commerce. And, no, today's cybershit isn't remotely as revolutionary to this era as coal fired steam traction and petroleum introduction and air flight and telegraphy and on and on to its.

Should bitcoin, and any number of other fiat currencies (why, one might wonder, is it OK for private issue fiat currency to exist, but not sovereign?), displace national currencies, batten down the hatches, Bro! The Dark Ages will have returned. The Winklevossen will be the liege, and the rest of us serfs.

20 November 2013

Dee Feat is in Dee Flation, Part 28

Well, here we go again. The CPI percents are out, again. And, again, DEflation is the rule of the day. We're going Japanese. All you folks that been stuffing your moolah in the mattress, you win for the rest of us losing.

17 November 2013

Not Such a Nobel Man

Lars Peter Hansen is the Other Guy who got the Nobel in economics this year. Mostly been quiet about it, although it was generally understood from the outset that he was somewhere in between Shiller and Fama (get it?) on the ideological spectrum. Well, today Jeff Sommer in the NYT has a bit of an interview. I'm disappointed. This is a Nobel Man? He labours at Univ. of Chicago, which makes him, a priori, a Freshwater economist. (That's another way of saying Right Wing.)

As with most econometricians of late, he ignores policy (or, as some do, provides cover for his preferred version), and toes the stats line.
Earlier in his career, along with Professor Sims and especially with Professor Sargent, he provided some of the mathematical underpinnings for what is known as the rational expectations theory -- the notion that people use all available information in making economic decisions.

Nonsense. Capital, in particular, makes decisions based on gaming the rules of engagement. To posit otherwise is foolish. If they really were "rational" there'd never have been a Great Recession, since no rational Bankster or CDO insurer would have touched those mortgages with a ten-foot pole. The mortgage companies wouldn't have made them, either, since such instruments were bound to fail. While the macro folks in New York and Washington might have willfully ignored the fantastic unsticking of median house price to income ratio, local real estate agents couldn't. The numbers were in their faces every day. Early on in the run up to the crash, I read/saw some reporting in which the reporter asked one of these how the buyer could possibly carry the mortgage he just sold them. His response: "I don't care". He didn't care because he'd gotten his gelt, and from then on the problem belonged to someone else. Such a country!!

One might, and some have, argue that everyone from the local real estate agents on up to the CEOs of Merrill and AIG and so on rationally expected to get a Washington bailout when it all imploded. But that's both specious and tautologous. No one who hews to the homo economicus myth can argue that it is rational to depend on welfare.
It suggests that people may not "be fooled by policy makers" into making decisions against their own self-interest, he said -- for example, by spending all the proceeds of a one-time tax cut if they understand that the windfall is only temporary.

This is an astonding assertion, and is contradicted by actual behaviour. Folks used these "one time" gains in house appreciation as ATM withdrawls, particularly as median income continued to stagnate. And people do so every spring, with that tax refund they get. Never mind that 99.44% of those getting a refund have no clue that they've lent the money to Uncle Sugar at 0% interest. Come on!!
Prevailing economic models do not adequately explain the financial crisis, the severe recession or the weak global recovery, he said. "Systemic risk" is a buzzword for politicians and financial regulators, he said, but "the truth is, we really don't know how to measure it or what exactly it is."

Again, more willful ignorance. The data were out there and available to modelers. But, just as the Banksters took the notion of musical chairs ("while the music plays, we all have to keep dancing"), or Russian roulette, with the real economy, so too did a large proportion of quants who claimed to be analyzing the economy objectively. Since the behaviour didn't square with both their bias and models, i.e. house prices are always correct, they made no attempt to incorporate conflicting data. And so we got a black swan event. Except that it wasn't.

As my Momma used to say, "what would the world be like if everybody behaved like you?" Ignorance of this question remains the flaw in the "macro is just the aggregate of all the micros" approach to all of economics, both theory and quant. It ain't, just as a local water supply can't be sustained if all residents treat all the water as all theirs. The fact that this remains unspoken by the micro folks just means it will happen again. Most quants, be they econometricians or hedgies, earn their pay from entities which ignore or actively dissemble the externalities they create. If Adam Smith (the real one) were right, then there would be no unpaid externalities. No fracking way, of course.

14 November 2013

Obambi, Meet Gresham

Gresham's Law is long and widely known in econ circles, though not mentioned often enough among the punditocracy. Obambi faces it now, and once again, he's blinked (as of the time I'm typing).

In essence, in the absence of symmetric true information, bad goods drive out good goods (hard to say, and it's not just coinage). There was a reason that the scam health insurance policies, almost all aimed at uninsured individuals, weren't grandfathered into the AHA: stupid poor-ish people are easily duped into buying same. They look only at the monthly premium, not at the expected value vs. the premium. Such policies will drive those most in need of real insurance into faux insurance.

As I type, the news states only existing (and those canceled, allegedly, due to AHA) policies will be allowed to continue. New buying is not permitted. We'll see the Right Wingnuts crying: "let the market decide!!!" once again. As if health is a market good. Ayn Rand would be proud.

13 November 2013

And The Choir Sings, "Amen"

From the outset, this endeavor was built on the notion that economic collapse is always traceable to income and wealth concentration. The reasoning is straightforward: collapse of an economy can only happen when most of the folks have little of the GDP and a few folks have most of the GDP. And so it has happened. The mainstream pundits, on the whole, haven't been willing to call a spade, "you're a spade". But every now again, it happens.

Today is such a day. In the journalism biz, it is standard practice to run the lede (that's the term, and not my typo) in/as the first paragraph. Porter didn't do that, so I've put the nut here:
Professor Katz illustrates this with a nifty calculation. Between 1979 and 2012 the share of national income captured by the richest 1 percent of taxpayers increased from 10 percent to 22.5 percent. Had their share instead remained at 10 percent and the rest been distributed equitably among taxpayers in the bottom 99 percent, each would have $7,105 more to spend.

Can't get more obvious than that, now can we? The issue, as framed by Porter, is whether increased education is really the panacea to rebuilding the decimated middle class. In the piece, he presents evidence (from other researchers) that such hasn't been the case. And, one can reasonably infer, won't be in the near future. It's the distribution, stupid.
Both sides agree that the overall weakness of the job market since the turn of the millennium is a prime culprit. As Professor Katz noted: "The only moments we've had of broadly shared prosperity have been in tight labor markets."

In other words, without "countervailing power", to use a term from old style political economics, capitalists will always be able (sans a change in laws) to exploit the excessive breeding of the lower classes. Stop dipping your pen in that inkwell. I recall seeing Paul Theroux on C-SPAN/Booktv a few years ago flogging a book at some book festival. During the Q&A session he responded to some question with, "stop having so damn many kids!" Or thereabouts. Remember, what we now call the middle class had its birth following the plagues of Europe, which wiped out masses of peasants. Those that survived got more gelt. I mused about that before.

One of the researchers does get it, though:
Mr. Mishel's preferred explanation of inequality's rise is institutional: a shrinking minimum wage cut into the earnings of the nation's least-skilled workers while falling trade barriers, deregulation and the decline of labor unions eroded the income of the middle class. The rise of the top 1 percent, he believes, is mostly about executive pay and the growing footprint of finance.

Policy drives the economy, not data. Data always loses if it disagrees with policy comfortable to those who can control policy. Just like in the Dark Ages.

In another one of those coincidences of publication, we find Germany being called a spade, by some. As mentioned here a few times: Germany is intent on punishing the victims, mostly so, of The Great Recession. The EU/Euro can't work without a Federalist fiscal system. And that means the Northerners have to stop wringing the last kopeck out of the Southerners. The Germans, clearly, think they can keep going by killing their customers. They can't, but policy trumps data, of course.
The trade surplus has become a source of friction not only with euro zone partners but also with the United States. Washington has warned that Germany's export success, with no offsetting demand for imports, has depressed demand in the euro zone and increased the risk of deflation.

Too bad "Washington" hasn't figured out that the FIRE brigade here keeps its heel on the neck of the 99%, just as the Germans have the Greeks et al. Easier to give others advice than to do the right thing in one's own home.

10 November 2013

Kumite', Again

Anthony Bourdain is among the most interesting of reality show personalities. He's now on his third show, and third network: "Parts Unknown" on CNN, Sunday at 9 PM. (As with his previous shows, the title is both metaphor and allusion: he goes to places tourists seldom do, and indulges in eating animal bits that suburban Americans wouldn't, and likely don't even know about.) Somehow, I missed last week's episode, but I saw a promo for it, in which he talks about doing the episode. It's even edgier than usual. Which is more than usual for basic cable.

The episode is Tokyo, but not the touristy parts. It repeats again Sunday, the 10th, at 8 PM. You should see it. This Tokyo is disturbing.

Well, it's Tokyo and Tony visits with a sushi chef he'd known for years in New York, Yasuda. At about 20 minutes into the piece, we see that Yasuda has been practicing karate for some years, and we see a few minutes of footage from the dojo he uses in Tokyo. An earlier missive in this endeavor made metaphor of karate and kumite'; not all practitioners have the skill and discipline to fight as they practice. There's some kumite' on display, and some, but not all, of the roundhouse kicks are by the book.

We find that Yasuda does, both in kumite' and sushi.

Yasuda, not too surprisingly, is a stickler for doing sushi the right way. His knuckles remind me rather a bit of George's.

06 November 2013

Great Expectations

A bit of history: in the late 1960s Uruguay's attempt to be the Switzerland of South America was coming unstuck. Most folks were getting poorer and a few folks were getting richer. The real economy was more surreal than real. Perhaps not the first, but certainly the first time in a long while, found the birth of the urban guerilla; generally educated and often from the dwindling middle class.

Today's news brings some related stories.

First, even US public education is mostly for the rich.
In New York, according to Peter Applebee, an expert on education finance at the United Teacher's union, only 18 percent of students in the poorest 10 percent of school districts scored above proficiency level in math last year. In the richest tenth, 45 percent did.

These gaps will be hard to close until the lopsided funding of education changes. As income and wealth continue to flow to the richest families in the richest neighborhoods, public education appears to be more of a force contributing to inequality of income and opportunity, rather than helping to relieve it.

And, as one might expect, New York is not the outlier, on the whole.
Among the 34 O.E.C.D. nations, only in the United States, Israel and Turkey do disadvantaged schools have lower teacher/student ratios than in those serving more privileged students.

Just to be fair, sort of: the expenditure figures in the piece make no (claimed) attempt to weight by local price levels. Appalachia is certainly cheaper to live in than Manhattan, so unweighted teacher pay isn't the best measure. Materials and the like cost about the same irregardless of location.

One might wonder what the result would be if all kids, rich and poor, got quality education? Would the USofA become a bastion of productivity and wealth? Is there an archetype, in the here and now, that we can look to for evidence?

Now that you mention it... China
... crowded with educated young people who are trying to figure out their futures in a country where the job market still prizes assembly-line workers willing to labor monotonous hours on backless stools.

Hmmm. No Child Left Behind? China's industry really is the 19th century New England Mill Town model. I've said it before, and here's more concrete evidence. Train kids to be rocket scientists, and they're not likely to jump at the chance to imitate Charlie Chaplin in "Modern Times". Gotta love the title, 1936 was when modern actually meant something.
The common theme of all the policies: how to create a consumer-led economy and arrest a steep increase in unemployment among young, educated Chinese.

But, Nixon opened China so that US corporations could exploit all those eager Chinese wanting US made consumer goods, right? Well, no. Nixon opened China to exploit all those rice paddy workers who would be moved to simplistic factories making goods for our 10%. Welcome to bi-lateral fascism. Now, both countries are in a fix. Payback's a bitch.
A big impediment to creating a consumer economy are the low incomes of a generation of China's young people, the country's would-be consumers.

As if this is any surprise to anyone with more than a turnip for brains.
"I want a job for which I was trained, or else my education will be wasted. I don't want to work in a factory."
But without broader policy changes, economists question how the Chinese economy will produce enough desirable jobs to bring down youth unemployment, particularly among college graduates, a group that has been among the most politically volatile in China.

Been there, seen that. And so China goes down the same black hole as the US:
Similar plenums in 2003 and 2008 produced calls for a shift to a more sustainable economy based on more consumption, more high-end services like finance and more high-tech jobs.

Just what the world needs: not just one global economy crasher, but another entire country dedicated to weapons of mass financial destruction. To quote Dirty Harry, "Swell".

Lastly, we have a Mingus on Wall Street. Steve Cohen was passionate about getting rich. He did, and proved that the way hedge fund quants make money is by cheating. Numbers are nice, but knowing the numbers before anyone else is a sure thing. And, it's good to be rich,
But there is perhaps one group that will not bear any significant costs: high-net-worth investors.

"This will not put the fear of God into the individual investor," said Martin D. Sklar, a lawyer at Kleinberg, Kaplan, Wolff & Cohen. "The S.E.C. and Justice Department have not made any of the investors bear the losses -- in a way, you are not incentivized to invest away from the crooks."

The rich still get to keep the ill-gotten gains. What a country!!??!

05 November 2013

Frankly My Dear, I Don't Give a Damn

Let's, for the moment, assume that Obamacare works much as it was designed: provide affordable healthcare. Next, let's follow Einstein's lead and conduct a thought experiment. He devised the notion, although not the algebra, for the theory of special relativity whilst sitting on a tram looking at a receding clock tower. He imagined that, were the tram moving fast enough, the clock would look to him, on the tram, to have stopped. And the rest is history and a Nobel. The proceeds went to his estranged wife, whom he didn't like all that much. Oddly, still more: she did most of the algebra underpinning special relativity. Albert was a bit of an ingrate. Didn't believe in quantum theory, either.

What, then, can we imagine would stop if Obamacare works as designed?

Mostly, bad marriages. Very Einstein, don't you think? And why would one come to such a conclusion? It's been well documented that having access to healthcare is a powerful force, keeping otherwise disgruntled people in bad marriages and bad jobs. House ownership, too. But Obamacare doesn't deal with that. Yet anyway.

So, we should see an increase in divorces. Whether that increase will be above sampling noise, is another issue. But unintended consequences have a habit of occurring. Just ask Greenspan; he crashed interest rates without much of a clue what would ensue.

Bookmark this post, and come back in five years. If the globe hasn't exploded, of course. Never know what the Jews and Arabs might do.

04 November 2013

Pretty Boy Floyd

Floyd Norris' column this Saturday was unusual, in that there was no cite to the QWERTY Analytics (or some such), just his byline, NYT, and BLS data. Let's see.

Start with the title:
Changes in Labor Force Mask Gains in the Jobs Situation

With such a title, one would rationally expect that he's going to present data which contradicts both the Left Wing and Right Wing Nuts, who point to the continuing drop in the size of the labour force as the main reason the stated unemployment rate has fallen. The lack of progress by Obambi is something both camps agree on. They disagree as to why, of course. The Left asserts that the Tea Party House (and the Senate, but less egregiously) eviscerated the stimulus effort; they got to spike the recovery and shift the blame to Obambi. The Right disclaims any responsibility for watering down the stimulus, claiming it wouldn't work at any amount of money; the key is to get all those welfare cheats back to work at starvation wages, and then all will be well.

The record is clear: the Right did spike the stimulus. What might have happened with either a more focused stimulus, or none at all can't be known now. We do have much historical data to demonstrate that robust stimulus works. It's called World War II. It would be helpful to get the stimulus effect without all the dead bodies and razed cities, of course.

So, he continues:
But the actual employment picture may be better than those statistics would indicate. Over the last few years, the labor force has changed in important ways because of demographics.

The accompanying charts attempt to adjust for those changes. They do not show a strong recovery, but they do indicate that the overall employment situation has improved.

One might reasonably infer from this that, despite a drop in the size of the measured labour force (usually referenced as the Labour Force Participation Rate, rather the count), unemployment has really gone down, i.e. employment has really gone up. Let's see.

The makeup of the working age population has changed substantially in only a few years. When the recession began at the end of 2007, 54 percent of the people considered to be working age were in the prime working age range of 25 to 54. Now, the figure is 51 percent. The proportion over 55 went to 34 percent, from 30 percent. With more people at or over traditional retirement age, it should be no surprise that fewer are working.

While I don't have a cite immediately to hand, data since The Great Recession began have measured an *increase* of older workers working past the "average" retirement age of the years previously. In other words, to the extent that older workers make up the demographic, there is data indicating that they've not gone off to the Life of Riley Hammock, sipping gin. And if we look at the linked graphs, we see that old folks continued to work. If you examine the middle cohort, in middle dense blue, you can see that the unemployment rate and participation rate track exactly in The Great Recession period, lending credence to both the Left and Right that things ain't all that much better.

In sum: the oldest cohort has stuck to the labour force in greater numbers than in the past, from which those with rose colored glasses conclude that the unemployment situation is getting better, overall. For those not so festooned, the middle cohort has, even with Norris' "adjusted" numbers taken it the gut. The youngest cohort, worse still.

As I read the data, the oldest cohort retains due to coercion, not choice. Their positive effect on overall employment status isn't really a positive: they can't afford to retire and leave their jobs to younger folks. This is not progress. Note that the Right Wing Nuts constantly bray about forcing the old farts to work until 70 or 75; after all in 1935, 65 was the average life expectancy so we should obviously raise today's retirement age to average life expectancy. Makes sense to me.

30 October 2013

Show Me The Money!

Gentle reader, do you recall what I've been saying about quants, that Giant Pool of Money, and predicting the future? That, even without the various QEs, interest rates would still be falling, since there's less demand for physical capital. And that's because paybacks are getting longer, plant and equipment (especially in anything semi-conductor related) is getting more expensive, and thus monopoly/monopsony becomes the state of the world?

Well, lo and behold, we have today's bit of news, and there's a link to the original EETimes piece.
If we take things back another step, the reality of the semiconductor business is that fabs are expensive to build and maintain. Then they need to be updated every couple of years to the latest technology, or at least new fabs need to be built to stay competitive. If you can't run your fabs more or less at capacity, you start to fall behind on all fronts. If Intel can more than utilize all of their fabrication assets, it's a different story, but that era appears to be coming to a close.

A fab ain't a steel mill, which you can milk for decades. Ah, if only we had the good old days. And some label Buffett a silly old man.

Oh, and the PPI/CPI numbers out this week are benign. All that QE money still ends up with Mr. Market and ABC Corp. trading old, expensive (on a relative basis) debt for cheap debt. And some quants wonder why there's no job creation?

24 October 2013


Some recent readings have me musing once again on the notion, "there's many a slip twixt the cup and the lip."

After finishing school, I set out into the world of work, at a time when the USofA was contracting. Not quite so bad as The Great Recession, but pretty close. I ended up mostly in my chosen profession, and got exposed to systems' building and stats-in-the-wild (SPSS). I also found that not all jobs are as time consuming as graduate school, and thus leaving significant number of hours in the day to fill; more or less meaningfully. I sought out forms of physical activity, a welcome change from six years of sitting in class, library, and impromptu study hall.

Off to the Boston Y, next to the Green Line as was my abode at North Station. How about karate? Dave Edwards was teaching a class, so I talked with him about taking his class. He advised me to study with his teacher, George Gonis over in East Boston. George taught (near as I can tell, he's no longer teaching) his branded version of Gojo Ryu, which he first learned from a man in New York City, and later continued with the man's father in the mountains of India. I don't recall ever knowing their names. As fanciful as it sounds, my all too brief (soon after I was off to DC, and Dr. McElhone) tutelage covered the time of one of his trips to India, so I was around when he returned from promotion (a higher level of black belt, but I've long since forgotten what number). Not having a hair on one's body is kind of striking. Unlike olympic swimmers, this process was part of ritual cleansing, not a mode of faster movement.

To complicate matters further, I also found an arts/meditation/foobar workshop in Cambridge, where I found a tai chi teacher, Julian Miller. His brother, Don would be there occasionally. Julian learned from William C.C. Chen, while Don with T.T. Liang, who has since passed on, although I did get to see him perform a double sword form in Boston when he was about 74.

Karate is considered a hard style, while tai chi is the ultimate soft style of eastern martial arts. Kung fu is generally considered in between. Never did do a kung fu, although I've toyed with the idea of aikido. They all teach in two parts: forms and free fighting. In most karates, the latter is called kumite'.

Now, what you see in 99.44% of mixed martial arts, kung fu movies, and the like has little to do with what is taught. More interestingly, the same is true in the kumite' section of tournaments put on by legitimate practitioners. This is particularly true of kicks. And most particularly true of the signature kick of karate (not so much in tai chi), the roundhouse.

Much to my surprise the Wiki has a description, and pretty accurate from my history anyway:
The original method involved bringing up the knee, and then swiftly turning the hip over and snapping the leg outwards from the knee to deliver a strike...

What part of the foot is used varies. When first taught, the instep. But the preceding quote is farther down the page. This is what the opening paragraph says:
A roundhouse kick (also known as swinging kick or a power angle kick but often confused with the round kick) is a kick in which the attacker swings his or her leg around in a semicircular motion, striking with the front of the leg or foot.

The difference in wording is critical. What passes, today, for a roundhouse kick is merely a leg swing. It isn't of much use, as it telegraphs it's intentions like a horny sailor on shore leave. The true roundhouse begins with the knee thrust upward. If you've studied with a veteran, you've been taught that from the knee elevated position, at least two kicks can be completed: a front snap or a roundhouse. Yes, a true roundhouse is a front snap on its side. The front snap extends the energy of the moving glute and thigh through the lower leg to the foot, and thus the target. Whichever part of the body the opponent has left least protected determines how to finish the kick; either the head or the kidneys. Take your choice. If you've studied well enough and long enough, both kicks take the same time to complete. There's no speed advantage to the simpler front snap.

What the hell has this got to do with databases and stats, I can hear from the peanut gallery!!!???

Just this. Folks who should know better de/un-normalize the schema because everybody else says it's for performance. Folks who should know better abuse the assumption of normality (not to mention homoscedasticity) in data without even thinking a second about it. There was a time when "thou shalt not estimate beyond the data" was the First Commandment. Not so much these days. The trigger for this stroll down memory lane were some recent posts.

This on the problem with backtests.
This on joy of honest data analysis.
This on backtests.
(all links posted on R-bloggers; you do spend time there as I suggested?)

It's easier to do a leg swing and call it a roundhouse, but that doesn't mean you should.

22 October 2013

Klein Bottle

When I was in high school, or perhaps even as early as junior high, I discovered geometric topology (algebraic topology is a tad tougher to grok), in the form of various conundra. Prime among equals was the Klein bottle.
... informally, it is a surface (a two-dimensional manifold) in which notions of left and right cannot be consistently defined.

Lawrence Klein, on the other hand, certainly knew left from right. He was, on the whole, of the left.

And, contrary to certain mealy-mouthed economists of late (nudge, nudge; go read recent musings):
"The only satisfactory test of economics is the ability to predict," he wrote.

Pop Quiz

Claaaaaaaaaaaaaaaassssssssssss!!!!!! Listen up!!

From today's newsfeeds, Briefing.com:
08:34 am : [BRIEFING.COM]
September nonfarm payrolls came in at 148K versus the 183K expected by the Briefing.com consensus. Nonfarm private payrolls added 126K against the 183K consensus. The unemployment rate was reported at 7.2% while the Briefing.com consensus expected the rate to hold at 7.3%.

Jimmy, how does the answer get smaller when the numerator got bigger? Jimmy?? Jimmy, you stupid sloth, what's the answer!!!!!!!!!!!!!

21 October 2013

Politically Incorrect

More bloviating on the Nobel choice of economics winners. Today it's one Raj Chetty who argues that "Yes, Economics Is a Science". He's wrong, of course, despite living in a saltwater economics environment with Krugman, et al.
I'm troubled by the sense among skeptics that disagreements about the answers to certain questions suggest that economics is a confused discipline, a fake science whose findings cannot be a useful basis for making policy decisions.

No, what's troubling is that the likes of Fama live in a bubble, often parodied by Maher. And the likes of Chetty don't call bullshit.

And the reason: the data is used to support the a priori policy decisions. Each side hires quant guns to defend it. I don't think Chetty even read his piece before submitting it, because he tells the tale of dueling data over the question whether extending unemployment insurance duration leads to a welfare society of entitlement junkies.
These studies have uniformly found that a 10-week extension in unemployment benefits raises the average amount of time people spend out of work by at most one week. This simple, unassailable finding implies that policy makers can extend unemployment benefits to provide assistance to those out of work without substantially increasing unemployment rates.

Economics isn't a science, it's political economics, as it was called in Adam Smith's (the real one) day, and with good reason. Economics of the sort of Fama, which serves only to defend social Darwinism from protest, was what motivated Smith and those a generation or two on both sides of his life to coin the term Political Economics. They were well aware that the commonweal is different from the benefit to the very upper class, and set about devising an explanation for why the 99% ought to reap more of the benefits of an economy. And they understood that the key was the political process. With autocracy one had monopoly. Which the chicken and which the egg? Flip a coin, because it doesn't matter. Once one abides the other comes along for the ride. Left alone, the monopolist/autocrat would grind the rest into subsistence poverty. The only way to combat this devolution was a set of law which protected the majority from the minority.

If autocracy is the form of "government", then the autocrats, by definition control that which is of value. If monopoly, such as oil fields in third world countries, then the monopolist has to be "protected" from protest by autocracy. Or, who is the NSA protecting?

These days the likes of Fama continue to garner great gelt from the deepest pockets, just as F. Lee Bailey once did. The other issue is data itself: micro data is readily available to corporations/lobbyist/etc. since they have dominion over the process under study. Macro problems, on the other hand, are supplicants to governments (and a few NGOs) for orts of data. Most often this is sample data of shaky provenance. Just read the entirety of a monthly BLS employment report; you'll be in tears.

One of the quite recent indictments of the Fama myth of perfect information, and such, is the cost/price/margin situation with the iPhone 5C/S. If there were rational consumers and perfect information, as the Fama acolytes insist is the way the real world works, then the price difference would reflect the marginal cost difference. According to iSuppli there's a $26 difference, which ends up being a $100 difference in price. In Fama's world, that can't happen. But it does.

Economics will remain not-a-science so long as the mass of economists engage in advocacy to the highest bidder, irregardless.

15 October 2013

Noble Gases

These are the noble gases:
Helium, atomic number 2
Neon, atomic number 10
Argon, atomic number 18
Krypton, atomic number 36
Xenon, atomic number 54
Radon, atomic number 86
A bunch of guys in Stockholm, intellectual number 0

Yes, a bit of spleen regarding the good burghers of StockholmM who decided to award the economics prize to two right wingnuts from Chicago and one rationalist from New Haven. Talk about schizoid? Or, perhaps, they were intimating that sometimes the quant/micro guys are right and sometimes the behaviourist/macro guys are right?

In one sense, I suppose one could make such an argument. The problem is: what's good at the micro/quant level (corporation or hedge fund) is seldom good at the macro level. As Charles Erwin (not Roger Smith, and not what's commonly quoted) infamously said, "...I thought what was good for our country was good for General Motors, and vice versa". Not that there's much semantic difference between the two statements. Turns out, not so much.

The underlying problem of quants versus the world, is that quants engage in gaming a zero sum game for their employers, while the macro folks worry about the greater good. Micro folks, not surprisingly, both deny that value judgments are meaningful and that whole is greater than the sum of the parts. In other words, an economy which produces 1 billionaire is just as good and fair as one which produces 20,000 $50,000 households. Chew on that for a minute.

Fama adds a snarky quote:
Asked in 2010 about those who warned that housing prices would crash, he responded, "Right. For example, Shiller was saying that since 1996."

Sometimes you just want to slap the brat.

07 October 2013

The King's English

(HSBC, apparently, doesn't want to hear bad tidings, as it wouldn't Submit the following. The reference is to this piece.)

Well, it is comforting that fascism reigns supreme amongst the bankster crowd. Mr. King listed 5 reasons for a decline of The West. He missed out.

The most important proximate cause of the decline is the rich waging war on the poor (see: Warren Buffett). Since the 1973 OPEC/Arab oil embargo, the 1% and .1% of Western countries have amassed an unprecedented proportion of wealth; not seen in the modern era. One must needs return to the US Gilded Age, and the economic wasteland of the time. Just as the Right Wingnuts of the USofA want a country that looks as it did in 1850, it appears Mr. King does too. Unfortunately, there isn't another virgin resource continent (virgin, if one chooses to decimate those already living there) to be had.

In fact, economic growth is doing quite well, if you look narrowly at capital/labour productivity. What's missing is a method of distribution. Oddly, Mr. King channels Adam Smith, but ignores Smith's open disdain for capitalists. He really should re-read the book.

The reference to the French Revolution is particularly galling: the revolution happened because "Let Them Eat Cake" was the modus operandi of the rich.

The excesses have been two fold: the 1% grabbed an outsized share of GDP, and the rest took to home equity loans (made easily available by banksters, at a nice up-front profit) to maintain subsistence.

Blaming the poor for economic decline is a trite approach; blame the victims.

02 October 2013

Morose Reactionary Insurance

A while back, I mused that even the 1% would need Obamacare. I offered up the non-data based, just logical, argument that MRIs would become too expensive, due to the high fixed cost relative to marginal cost, should the number of scans be substantially reduced. Without Obamacare, and the increase in the uninsured, eventually the "poor" will be allowed to suffer (and die). No MRI for you.

Finding actual data on the specific fixed/marginal load isn't easy. I've finally found a Nova Scotia study which helps. (See Appendix C, the total cost is about $3 million.)
A conventional high field fixed site can be sited with appropriate shielding, connectivity, receiving and waiting room all in the vicinity of 2.6 million dollars. In addition, "uptime" is reported to be higher in a fixed site.

It is recommended that the province fund and operate each scanner eight hours a day, five days a week, booking 14 patients per day. Each scanner operating 50 weeks per year at 70 scans per week would provide up to 3500 scans on an annual basis. This would increase capacity up to 7,000 scans. This would bring the Province of Nova Scotia closer to the national average. Current data is changing in view of the rapid diffusion of MRI technology across the country.

If you look at the detail on page 20ff, you'll see how tiny the true variable costs are. The staff is salaried (i.e., in normal accounting they'd be paid from one account, and "billed" back per MRI to another). The variable costs, "supplies" of various sorts, come to $87,000 per year. That's $24/MRI. As to the fixed cost, let's say interest free amortization over 5 years for the $3 million installation. That's $600,000 per year. Remaining fixed cost is $535,000 per year. So, we're left with $1,135,000 to defray for each yearly block of 3,500 scans. That comes to $324/scan. As simple arithmetic makes clear, viability is highly dependent on usage. Cut the usage in half, and total cost nearly doubles. Yes, for once the world is linear. For more expensive procedures, robotic surgery machines for example, their vendors will simply go out of business. Rand would be so happy that we've found a way to rid the world of useless cripples.

01 October 2013

It's Rutting Season

This endeavor began with a simple proposition: history demonstrates, without equivocation, that economic growth and prosperity occur when consumers have enough wherewithal to clear all output at prices which support a return on capital (which is not usurious). It is, in the short term, a zero-sum game. Over the long term as well, since imbalance in the short-term leads to distortion, which is a positive feedback mechanism.

This notion is embodied in the subtitle: "It's the Distribution, Stupid". Props to Bubba for the template.

For most of this existence, it's been kind of lonely. Save for few rational left wingnuts, the lemmings in Kansas (that's a metaphor, see: Rich, Frank) have held sway over the nation's mindset.

Then, along comes Daniel from the lion's den. Who'd a thunk an investment banker would get religion? Well, one has. It sounds as if he's been reading my musings. If only.

Herewith some quotes:

We are in an age of global oversupply: an oversupply of global labor (hence high underemployment); an oversupply of global productive capacity (hence ultra-low inflation); and an oversupply of global capital (hence low interest rates).

We are not, however, in an age of global energy surplus. Far from it. One might argue that the malaise in the West began with the OPEC/Arab oil embargo of 1973. Prior to that, America squandered petrol like a drunken sailor, as My Pappy used to say. Suburban sprawl. Reliance on gasoline. Removal, much less creation, of public transport.

We are no longer faced with a world in which supply-side economic remedies -- easy money, reduced taxation, fiscal belt-tightening and deregulation -- can spur new capacity and the creation of well-paying private sector jobs.

It's worth noting that the financialization of Western economies, with physical production being banished, has much to do with the failure of supply-side mantras. If it were the case that the USofA (or the EU) was a closed economy, there is a grain of truth to had in supply-side. But it isn't, nor was it when Laffer made it famous. Keep in mind that Laffer didn't invent anything, merely popularized it. Much as LA gurus popularized and debased Eastern mystic religions.

Beginning in the late 1990s, a wave of capital, much of it the result of trade surpluses and big piles of savings in Asia, flooded the world's capital markets.

True, but the impact of 9/11, and the scurrying of said capital to financial, rather than physical, investment played the largest part. Real estate investment, heretofore, had been a backwater; save for insurance companies and commercial real estate (that's another episode). But with Greenspan cratering Treasuries, in a paroxysm of supply-side zeal, that Giant Pool of Money sought the nearest neighbor (a quant reference!). Houses. Bah.

Cheaper credit through monetary easing, for example, doesn't yield much in an era when cheap capital already exists in abundance.

Amen. As noted here, even recently, real return on real physical investment, particularly in the au courant sectors of high tech, has been falling due to the rapid technological obsolescence in the sector. A fab just doesn't have the productive lifespan of a blast furnance had in 1950.

24 September 2013

The Butler Did It

Andrew Ross Sorkin is generally a with-it sort of pundit. Today, he zigs when he should have zagged. He's crying poor mouth for JP Morgan shareholders, thus:
But look closer and scrutinize the S.E.C.'s 15-page description of its findings. Then think about this: When the S.E.C. says that JPMorgan is "paying" a record fine, where is the money actually coming from?

The answer: shareholders. The same shareholders who were ostensibly the victims of the scandal that already cost them $6 billion. The victims, if you want to call them that, become victimized twice.

Come again, Andy? Are you sure you've not changed your last name to Rooney? Whining voice and all that.

Andy has, conveniently, forgotten Citizen's United. JP Morgan is a *person*, so it gets dinked. The notion that Jamie Dimon, or all of Morgan management, could come up with the moolah to pay the fine is ridiculous. Moreover, it ignores the reality of corporate governance and shareholder responsibility. It was the shareholders, in a kangaroo election let's be honest, who installed these clowns and told them to "do as you will" to maximize the moolah flowing to shareholders. Management is hired to carry out the business for the benefit of the shareholders. Management, technically, is just hired help working at the behest of shareholders. Shareholders are the company, by definition; not managers. If shareholders install crooks, it's shareholders who pay the piper. Good on them. If shareholders want to make the decisions, then change charter to partnership.

Sorkin enlists another kook, one John C. Coffee Jr. (a professor of securities law at Columbia Law School) to state the case. They're both shills for the likes of Dimon.
"It is perversely inappropriate. You are adding injury to injury. All we're doing is punishing the shareholders more," said [Coffee]. "This is a case where the victims are the shareholders."

No. They're "victims" of their own perfidy. They want heads I win (Dimon et al get away with it); tails you lose (no one gets dinked for bad behavior). Where's that moral hazard slippery slope all the Right Wingnuts were bitching about during TARP?

Sorkin ends his piece thus:
Ultimately, Mr. Coffee came up with a simple metaphor to describe the case against JPMorgan and the penalty being paid up by shareholders: "This is a case about imposing a fine on someone who suffered a burglary for not taking adequate steps to avoid the burglary."

But, that's not what happened. This was a case of the butler selling the good silver on ebay, with your tacit approval, with the intent of getting lots more for it than it's really worth. If the gag works, you and the butler split the moolah. If you didn't check that the butler was a crook, then you're responsible. You can't go boo hoo-ing. You hired a crook, and got taken. Your own damn fault.

All You Need to Know

Here's all you need to know to understand where the future is going:
According the findings of an IHS report coming tomorrow (but shared with AllThingsD today), Apple spends at least $191 on components to build a 16 gigabyte iPhone 5s. The cost rises to $210 for a 64GB unit. The cost of assembly adds another $8 per unit, bringing the range to between $199 and $218.

The retail of a 16G 5s, no contract, is $649. Lots more in China.

Labor is 1.2% of the retail price. The notion that wages are driving capital out of business is silly.

19 September 2013


Sometimes, truth be told, one is a day late and a dollar short. For the past while, I've been reading up on new and revised stat stuff. And I've rediscovered the angst of dysalgebria. Don't bother running to your on-line dictionary, it's not there. But, as it turns out, I can't claim to have coined it. Dang. Here's a cite for the word:
Dysalgebria -- students with average to above average IQ can master calculations but can not master algebra (Nolting, 2000).

Oddly, perhaps, I fiddled with how to spell a word for the condition; my first inclination was: dysalgia, using only the root. That one appears, other than some vague site references, to be not taken.

Anyway, the condition I'm discussing isn't exactly what Nolting defines, but rather more the Einstein (by legend, in any case) syndrome; needing the assistance of math types to resolve the ideas into math formulae.

So, to continue the saga. I've been mulling over writing up a piece on how it is that so many are math-phobic, even math disdaining, when I read my dead trees Times this morning, and find an op-ed piece nearly on point. Dang. The author's point is not quite what I want to prattle on about, but there's enough meaty quotes to impel the musing.
As a mathematician, I can attest that my field is really about ideas above anything else.

And that's the key, it seems to me. This past Friday, Maher had both Matt Taibbi and Bill Nye. Taibbi on the panel, and Nye as the fifth chair later. Taibbi made a remark, tied to a recent piece in "Rolling Stone" apparently, that student loans were the next catalyst for collapse. Which led to a short digression on education and cost of same. In the course of that digression, Nye avers (paraphrasing) that we should incentivize the math nimble to make shit as real engineers, rather than wasting themselves in banksterism. Knock me over with a feather. I know of Nye, but have never seen any of his TV bits. He was quite animated. As I've asserted more than once: policy trumps data, and what Nye was pointing at was the perverse incentive that the Western economies have made for the math nimble. One might argue that capitalism has become so productive that we've not much need for further scientists and engineers, so the financial services industries are merely soaking up excess supply. Even so, it's still perverse.

Both mathematicians and educators have been fretting over how to teach math since at least Sputnik (1957). I was a guinea pig for a couple of those experiments: SMSG (Some Math, Some Garbage; as we students called it), and TutorTexts (and here). Neither made it to 1980.

Despite what most people suppose, many profound mathematical ideas don't require advanced skills to appreciate. One can develop a fairly good understanding of the power and elegance of calculus, say, without actually being able to use it to solve scientific or engineering problems.

Or as one recent text put it: you don't need to be able to derive these equations, just understand what they mean.

On a similar note, Nick Carr took issue, in a recent post, with the notion of teaching "thinking" over teaching "facts". As it happens, my self image has long been: mostly cpu, not so much memory.
Why bother to make the effort to cram stuff into your own long-term memory when there's such a capacious store of external, or "transactive," memory to draw on? A kid can google the facts she needs, plug them into those well-honed "critical thinking skills," and - voila! - brilliance ensues.

That sounds good, but it's wrong. The idea that thinking and knowing can be separated is a fallacy...

On the whole, Carr's holistic notion (he never uses those words) is correct. One needs a body of facts in order to reason. The issue is when should fact accumulation taper, and reasoning begin. Another larger issue is whether, and what's the result of, education should be about "critical thinking"? The answer here is, Yes it is. The reasoning is simple: how many plumbers, or any trade worker with at best a high school diploma, discredits the canards from the Right Wingnuts? Or, as all studies have shown, the better educated the more likely to be a Left Wingnut? Or, more specifically, the better educated the more socialized. Obama's difficulty with Syria has been as much from the Left (that doesn't buy the story) as from the Right (which only supports military adventures of Right Wing administrations). If you want a society of facile drones then, what's now called, vocational education is the limit to what you want to provide. Education is really about how to spot the holes. Training is about how to turn the dials. Fleshy robots. Is that Batty around the corner?

Back to math-y parts.
In schools, as I've heard several teachers lament, the opportunity to immerse students in interesting mathematical ideas is usually jettisoned to make more time for testing and arithmetic drills.

Here, I only partly agree. The symptom of dysalgebria is easy to understand: when the text moves from sentences to formula derivation (even one line of chicken scratches, as my Pappy used to say), the brain seems to lock up. The idea gets lost in the notation. The irony, if one is positively disposed, is that real mathematicians find the concision comforting. It's easy to spot a second or third year graduate school math-y textbook (for a full year course) in the shelves: it'll be the thinnest.

How does this happen? The answer seems to be concise: algebra is typically taught in 10th or 11th grade of high school, and never used, per se, much again. Trig and calculus often follow, but the rules of algebraic manipulation aren't consistently exercised. It's as if Goode learned the "Hammerklavier" at 15, but never practiced it again, but expected to be able to perform it (every few years) well for the rest of his life. Not. And, there's the fact that it's all connected, so a stat derivation (or, horror of horrors, a proof) make use of some set theory (or worse a bit of integration through a trig function) you last saw as a freshman. And so on.

So what math ideas can be appreciated without calculation or formulas?

The op-ed discusses some avenues, but my take is: watch The Science Channel. The formulas exist in order to prove the universe, or some part of it, really exists the way the ideas say it does. That's how the Higgs Boson was found: the formulas said it has to be there. Similarly for much of RM and stat, believe it or don't. Codd was a mathematician by training, and the ad hoc-ness of IMS is what led him to define the RM. On the stat side, it's much longer term. Stat started out as a poor cousin in math departments; MIT still doesn't have a stat department, while Harvard does (by Mosteller, 1957). Moreover, many of the ideas of stat come from math, and many of those are utterly abstract, not tied to things. Unlike physics, which uses maths in a more concrete form. Well, mostly.

Consider the lowly stepchild, ordinary least squares regression. Economics has been living off it for decades. These days, it's at most a chapter. Yes, there are still re-edited textbooks from the 70's still in print but Statistical Learning is the hot topic, and OLS gets a few pages. Oh, the insult. Now, the justification for minimizing squared error to fit some (linear) model (equation) to a bunch of data points can be simply: there's not much choice; you've got a bunch of data points to characterize, and the most logical way to do that (in two dimensions) is draw a straight line through the points. Where to draw that line? In the middle, of course. How to calculate the middle? Well, the line which keeps most of the points mostly near the line. Since some points will be above the line, and some below, taking squares ensures that all points are treated fairly; the negative ones don't cancel out the positive ones, or vice-versa. The best line will be the one that has the smallest amount of overall difference betwixt the line and the bunch of points. That's it. And, oddly enough, much of stat boils down to minimizing squared differences in practice.

But, that's just ad hoc futzing, isn't it? Yes, it is. Is that sufficient backup for pricing CDOs? Well, no; but not that the fancy algorithms were much help either. Viewed as an analytical problem, where the bunch of points is merely hypothetical, what would you do? Sounds like "best" means optimal, for some definition of optimal. Well, this sounds like an optimization problem. And optimization problems are what differential calculus does (way back in either late high school or early college). From there one specifies the functional form, calculate the derivative(s), set same to zero, solve; and voila': the maximum likelihood estimators, which conveniently devolve to OLS calculations for convenient assumptions about actual bunches of data points. Phew!!

Back to the quote. The focus shouldn't be to make math-iness interesting sans math, but to devise a method of pedagogy which improves the uptake of skills needed to not only follow algebraic proofs, but impart the skills to create said. Not so easy, or we wouldn't still be worried about it. Remember Bobby Fischer? When I was a young-un, chess playing and Fischer particularly, was a badge of intelligence. How could a normal person see so many moves ahead? Turns out, the psycho folks figured out the answer, and Nick Carr is more right than might be imagined. Really good chess players don't "think ahead", rather, they've memorized/internalized so many winning games that they identify the pattern of a game as it emerges, and play accordingly. Many general patterns/strategies are named: these are just openings. All those facts (memory), not so much logic (cycles). Activities which appear to be reasoning and math-y aren't always so.

When I was a freshman I had calculus; missed out in high school, where it was just beginning to be offered. The college had adopted a New Math-ish text, which used some au courant notation. The professor, on the other hand, was old and old school, and he insisted on using classic (not that we knew what classic meant, of course) notation in lecture. Same with the TAs. Since understanding math is largely about subvocalizing notation into comprehensible english sentences (that again!!), it was all a puzzlement. Any of you in the teaching/training biz: don't ever do that. It's naughty.

This would be incomplete without a mention of Khan Academy. I've watched a few of the videos, and they looked oddly familiar. Then, I recalled Sunrise Semester. Memory was faulty, in that I assumed it was an educational TV (what preceded PBS) show, but the fact that Springfield didn't have an educational channel, and the Hartford channel was UHF and not easily gotten. Hmmm. Well, as the Wiki piece tells us, it was CBS (and for rather longer than one might expect), and Hartford/CBS was easily received. Old wine, new bottles.

If I had the answer, after at least 50 years of professionals' failure, I'd be a rich man.

Since I've let this piece simmer on a back burner for some days, I just saw this piece that claims dyslexia is ameliorated by e-reader/phone type of display. My immediate reaction: "bollocks". And that is because I've, in the past, tortured myself with Great Books books. For those unfamiliar; the Great Books were/are printed much as bibles tend, with two narrow columns of text on a standard-ish form factor vertical page. I get headaches trying to read these. I guess I'm not dyslexic. On the whole, I don't buy this "cause" of dyslexia. Have I mentioned that the 80-column line zealots, in these days of ever wider screens, make me want to throttle them?
There is a controversy over what role visual attention problems play in dyslexia, [Lorie Humphrey, an assistant professor of neuropsychology at the University of California, Los Angeles] says. Many experts say the real problem is a difficulty in linking individual and groups of letters with the sounds they correspond to. The e-reader method wouldn't help much with that problem, Humphrey suspects.

Note the allusion to failure to subvocalize. That's the key to both dyslexia and dysalgebria.